Raymond Richman - Jesse Richman - Howard Richman
Richmans' Trade and Taxes Blog
Richard Duncan: World Economy on the Brink of Disaster (in 5 to 10 years)
In a commentary for Business Insider (The Present: On the Brink of Disaster), Richard Duncan, the Singapore-based economist who correctly predicted that global trade imbalances would cause the Great Recession in his 2005 book The Dollar Crisis: Causes Consequences and Cures, is now predicting that the world is on the brink of economic disaster, though the disaster is still 5 to 10 years away. Here are some selections from his commentary:
In today's WSJ, Congressman Fred Upton opposes EPA carbon regulation
Upton is the incoming Republican Chair of the House Energy and Commerce Committee. His commentary was co-authored with Tim Phillips of Americans for Prosperity. Here is a selection:
Interview with Piers Corbyn
In our American Thinker commentary on Monday, my father and I named Piers Corbyn the "Best Climate Predictor of the Year." You can watch an interview with him:
Here's a selection:
You can read the entire commentary at:
A New Solar Plant Shows the Economic Dangers of US Commitment to Environmentalist Foolishness
Two news items that appeared just before Christmas demonstrate the inability of our leaders to learn the dangers to America’s economic future of our espousal of so-called green energy sources. The federal government is taking a huge risk in subsidizing the construction of alternative energy sources like solar and wind power. The federal government wasted hundreds of billions of dollars in Pres. Obama’s $800 billion economic stimulus plan by such subsidies and, as seems clearly evident, created very few jobs.
The first news item appeared in the Wall Street Journal, headlined “Spain’s Cuts to Solar Aid Draw Fire”. It reported that a group of international investors has called on the Spanish government to reconsider its plans to cut costly subsidies for solar power, “including existing power plants”. . In Spain, the government pays the extra cost “roughly 10 times the price utilities pay for power produced from conventional sources such as gas and coal”. Last year, the government paid out €2.6 billion. Now it wants to reduce the existing subsidies. But investors who have acquired a vested interest in continuation of the inefficient subsidies want them continued. Apparently, our leaders are committed to the same foolishness. ...
Winner of this year's 'Best Climate Predictor' Award
It's time to choose the winner of this year's "Best Climate Predictor" award. There are five nominees: (1) Al Gore, (2) Arnold Schwarzenegger, (3) the IPCC of the United Nations, (4) Piers Corbyn and (5) President Hu.
Gore, Schwarzenegger and the IPCC made their mark through their dramatic predictions of catastrophic sea level rise due to increased carbon dioxide in the atmosphere. Al Gore once predicted that sea level would rise by 20 feet over the century. Last year, Governor Schwarzenegger unveiled a map showing world sea level rising by 1.5 meters over the next century. In 2001 the IPCC predicted that sea level would rise by 3 feet over the next century. The actual rise over the last 18 years is 1.85 inches, which works out to 10.4 inches per century. This is similar to the 20th century's rise of 8 inches, but much less than the average rise of 4 foot per century for the last 10,000 years as the glaciers left by the last ice age continue to melt.
The chart below shows how these predictions stack up against 18 years of accurate satellite measurements:
Al Gore's prediction is clearly the best of these three. He was awarded a million dollar Nobel Peace Prize for bringing this issue to the attention of the world. The IPCC's prediction is second. At the Cancun Conference this month they won a huge expansion of the UN bureaucracy. Schwarzenegger's prediction comes in third since it is not yet clear whether he will get the global warming spokesman job in the Obama administration that he is angling for.
British astrophysicist Piers Corbyn is the clear loser. He still works out of a drab office that the Sydney Morning Herald calls "undistinguished":...
The Irresponsible Tax Compromise
The current leaders of both political parties have been totally irresponsible. They are following the same foolish strategy that some of my beginning economic students try in one of the simulation games that we play. They continually run large government deficits to keep their economy stimulated. At first the government deficit spending helps. But eventually debt payments become such a huge part of government spending that the government loses its ability to ever balance its budgets. From then on, the growing government spending causes hyper inflation which makes the economy totally unmanageable.
Peter Morici had a great Seeking Alpha commentary on December 20 (Downgrade U.S. Treasuries to Junk). He pointed out that the irresponsible tax compromise between the Obama administration and the Republican congressional leadership will result in huge budget deficits into the distant future:
Then he pointed out that this will cause term-term U.S interest rates to climb and climb, as has already begun:...
Election Mandates, Party Principles, and the Tax Cuts
The recent decision by Congress to pass a tax-cut focussed stimulous package consisting of roughly 875 billion in deficit spending over the next two years reflects a compromise between the Democratic and Republican Parties, but it is a compromise in which both parties suggest a lack of concern about debt and deficit spending, this in spite of a midterm election in which Republicans won on the basis of that issue.
Although the 2010 election was a stark repudiation of the Democrats, it was not an endorsement of Republicans...
Schwarzenegger's Sea Level Prediction, One Year Later
On December 2, 2009, Governor Schwarzenegger unveiled a map showing the effect upon the California coast of sea level rising by 1.5 meters over the next century due to increased carbon dioxide in the atmosphere. The press reported the unveiling, showing no skepticism whatsoever.
How is his prediction doing? The red line is accurate satellite data through September reported by the University of Colorado; the black line is Schwarzenegger's dramatic prediction:
Hubbard and Navarro advocate VAT and end to currency manipulation in new book
Jeff Madrick reviews Glenn Hubbard and Peter Navarro's new book Seeds of Destruction: Why the Path to Economic Ruin Runs Through Washington, and How to Reclaim American Prosperity. He points out that Hubbard and Madrick are advocating a VAT, something that we advocate also. The VAT is a consumption tax, which means that it encourages savings and wealth accumulation. It's also inexpensive to administer, requiring just 3-5% in complaince costs, compared to 12-14% for our current tax code. Most important of all, it is also border adjustible, which means that it taxes imports into our country but not exports from our country.
Madrick pretends that one of their goals is to hurt the poor, even though VAT proposals almost always provide tax credits which make them progressive at low income levels:...
UN bureaucracy being expanded by Cancun Climate Conference
Viscount Monckton of Benchley reports the happenings of the Cancun conference in a December 9 commentary (The Abdication of the West) published on the Science and Public Policy website. Here is his paragraph in which he lists all of the new bureaucratic agencies being created to be paid from a $100 billion per year fund (by 2020) from the advanced economies:...
EPA regulation of carbon dioxide to begin January 2
On January 2, President Obama's Environmental Protection Agency will start requiring that American industries use the "best available control technologies" to reduce carbon dioxide emissions. This action will:
Congress needs to immediately revise the Clean Air Act in order to exclude carbon dioxide from possible consideration as a pollutant. Carbon dioxide is one of the three chemical compounds (along with oxygen and water) needed to sustain life on earth. It is not a pollutant.
Will improved trade deficit of October be temporary?
According to statistics released on Friday, U.S. trade numbers improved in October. The U.S. monthly trade deficit in goods and services (seasonally adjusted) improved from $45.6 billion in September to $38.7 billion in October as shown in the graph below:
About half of the trade deficit is our goods trade deficit with China. That bilateral trade deficit also improved, as shown in the graph below:...
Bernanke to China: Stop Hurting Us or You'll Hurt Us -- We're published in today's American Thinker
To read it, go to:
Here's how we begin:
China's competitor to Boeing and Airbus
Heartland Poll: Continued Public Support for Action on Trade
The newly released National Review / Allstate Heartland Poll contained an extensive battery of questions on trade and US manufacturing. The poll reveals strong public majorities in favor of a variety of measures that would move trade towards balance.
For example, 68 percent of respondents supported a policy requiring...
Bernanke starting to catch up to Evans-Pritchard
Back on December 20 2008 (Protectionist dominoes are beginning to crumble around the world), British-columnist Ambrose Evans-Pritchard explained the U.S. mercantilism going into the Great Depression, and what Great Britain did about it. Pritchard wrote:
In his November 19 speech, Federal Reserve Chairman Ben Bernanke went back to that same period. Citing a new working paper (Did France Cause the Great Depression?) by Douglas A. Irwin, Bernanke said: ...
Debt and American Power
In the recent issue of Foreign Affairs, Roger Altman and Richard Haass argue that growing government debt poses a serious threat to American power by increasing American vulnerability to sudden currency devaluation. The United States must move to put its fiscal house in order, or face a sudden sharp loss of power and prestige in the future as financial markets lose faith in the capacity of the American government to pay its debts. Paul Krugman's column in Monday's NYT also addresses debt, arguing that the President should allow the Bush tax cuts to expire.
In Washington, however, the current move towards compromise appears to be one in which both parties agree to the policies they prefer that increase the deficit....
American Economic Leaders keep giving Advice to China
With China growing about 10% per year and the United States growing at about 2% per year, I'm really getting tired of U.S. economic policy makers telling the Chinese government how to run its economy. They think that if China's leaders would just hear their cogent arguments, China would change course.
Take, for example, Treasury Secretary Timothy Geithner. In his written testimony at his January 2009 Senate confirmation hearing, he wrote:
Or take Federal Reserve Chairman Ben Bernanke’s advice to China in his November 17 2010 speech. He said:
This statement is incorrect in two ways. First China is not practicing "export-led" growth. It is practicing "mercantilism." If it were practicing export-led growth, its trade would be balanced, but currently it is running trade surpluses of about 5% of its GDP each year. Second, China is not hurting its long-term standard-of-living by practicing mercantilism, it is hurting ours.
At some point, Geithner and Bernanke and the rest of our arrogant policy makers are going to have to take the time to learn about mercantilism. And they have no excuse now that the key mathematical analysis of modern mercantilism is online, Heng-Fu Zou's 1997 Dynamic Analysis of the Viner Model of Mercantilism, originally published in the Journal of International Money and Finance. Zou is Senior Economist at The World Bank with appointments at both China’s Shenzhen and Wuhan Universities. China’s current policies may be based upon that paper....
Bernanke has learned what Richard Duncan explained in 2005
In his 2005 book, Duncan had predicted the Great Recession that began in 2008. Duncan understood that the trade-deficit countries, especially the United States, would not be able to continue purchasing more and more imports without the income that would come from exports. Countries can only borrow so much from abroad to buy imports until they experience financial crises.
But when the Great Recession hit in October 2008, American economic leaders thought that the U.S. economy could be fixed by shoveling debt from the private sector to the public sector and through fiscal and monetary stimuli. It has been two years now and, as Bernanke noted in his speech pointing to the data graphed below, “As you can see, generally speaking, output in the advanced economies has not returned to the levels prevailing before the crisis, and real GDP in these economies remains far below the levels implied by pre-crisis trends.”
Tax Cut Unreality
It is time for all true fiscal conservatives to come to the aid of their country.
Some Republicans are trying to sell the myth that the Republican victory in the November 2010 midterm elections was a mandate for the re-enactment of all of the tax Bush cuts. If the exit poll was right, it was no such thing. According to the national exit poll, 18 percent of the electorate said they thought the priority of the next Congress should be tax cuts...
Mort Zuckerman: Western decline caused by trade & budget deficits
In a December 1, 2010, commentary (The Danger of a Global Double Dip Recession is Real), Mort Zuckerman, editor in chief of U.S. News and World Report, comments on the decline of the west in general and the United States in particular. He largely attributes the decline to the combination of trade deficits (i.e., "current account deficits") and budget deficits. Specifically:
And, as he notes, U.S. policy makers have no solutions:...
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